Cost is often the first item on any list justifying the cost of moving businesses to cloud-based service provision. But forget CAPEX as an issue, and forget OPEX – especially in terms of the costs of service provision.
The big ticket for the future is the cost of Information Privacy and the lawyers that will be needed to oversee it. This, in the view of Dell’s Chief Innovation Officer, Jim Stikeleather, is set to become the key driver of growth and use over the next few years.
“The problem is we’ve never had an intelligent economic model for security, so there is no way to create a Return on Investment for it,” he said. “Firstly there is no good statistical model to tell you what is really going on in the world of security and cyber-crime because no one will talk about it. So it is difficult to know what to invest.”
But that is now changing with developments that have a real value to business managers. Stikeleather sees an important change as Governments around the world create more stringent privacy laws with criminal penalties attached.
“Now RoI means `Risk of Incarceration’,” he said, “and just that piece is priceless.”
Another key factor is that any issues that arise for a business around the subject of its compliance can now create a definable financial result, particularly for publicly quoted companies. The growing range of legislation can easily raise compliance issues that can, in turn, lead to a footnote on the audit report on a business.
“And a footnote can cause the stock price to go down,” he observed. “So we are getting to where the cloud is important, but not by a direct route.”
Because every country is passing its own privacy laws – and in the US every state is passing its own privacy laws – so the place of IT-based applications and services are moving into the same situation that has existed for 20 years in payroll.
“No company now does its own payroll, not because it is difficult, but because they can’t afford all the lawyers and accountants in place to keep up with all the jurisdiction that comes into place. So they give it to companies that specialise in that,” he said.
“So as all these privacy laws come into play businesses will not be able to afford the lawyers and information systems people needed to meet every rule in every jurisdiction. This will force people to go to the cloud service companies.”
Added to this is the fact that a lot of the new laws coming into play have a jurisdictional data location component. As an example, Stikeleather suggested a business having medical information on a German national. That information cannot leave Germany. But, he suggested, even a small business today is effectively multinational.
“It may only have one employee in Germany but all relevant records have to be stored in Germany – how are you going to do that?” he asked. “One way is a cloud provider.”
So, though the economic benefits in favour of cloud-based service delivery are pretty much unassailable, it is not that which is going to drive cloud growth. It is his view therefore that it will be the people and regulatory issue which act as the lever which moves users to the cloud.
This does, of course, pre-suppose that the cloud service providers have the wit to realise that providing the supporting legal framework to handle this requirement is now a core component of the service mix they have to offer. Providing the legal assurances that help business managers reduce their go-to-jail potential will be the nudge that pushes them to go to the cloud.
